Pick-up in specialty sales to push Sun Pharma stock higher

Mumbai: Most brokerages have retained a bullish view on Sun Pharmaceutical Industries despite the company’s March quarter profit missing estimates.

Sun Pharmaceutical reported a 123% year-on-year rise in its consolidated net profit for the quarter ended March to ₹894.2 crore.

CLSA, HSBC, and Motilal Oswal maintained buy, while Kotak Institutional and IIFL maintained add rating. Jefferies retained underperform. The stock ended down 4.3% at ₹669.65 on Friday.


Brokerages said better-than-expected pick up in specialty sales would be a key catalyst for the stock going ahead.

“A strong base business comprising India formulations and scale operations in EMs, coupled with success in its global specialty products should drive a rerating of Sun,” said CLSA, raising earnings estimates by 1-3% and revising target price higher to ₹850 from ₹760. HSBC said normalising patient flows, focused cost outlays and improved execution should sustain momentum for specialty sales.

Morgan Stanley said that besides a ramp-up in specialty business, strengthening of balance sheet and potential remediation of Halol plant may drive a re-rating.

Meanwhile, Haitong has downgraded the stock to neutral and cut target price to ₹700 from ₹740, saying that the stock is fairly valued.